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As the Biden administration seeks common ground across the Atlantic on China policy, it is timely to ask how similar or different are the objectives in the European Union and China in their relationship. An examination of the evolving discourse used to describe these ties serves as a starting point to grasp how differences have widened. Will this suffice for the US and the EU to find strong common ground? The article provides some early observations.

One thing that is striking about the relationship between the European Union (EU) and the People’s Republic of China (PRC) is how discursive it is. Since 2000, both have created a set of terms about each other. For the PRC these have been around framing the relationship as a “full partnership” in 2001,¹ upgraded to a “comprehensive strategic partnership” in 2004,²  to the far more abstract and grander “civilisation partners” accorded by President Xi Jinping when he undertook the first-ever visit to the capital of the union, Brussels, in 2014.³  The most recent Chinese government white paper on the relationship in 2018 accorded the link for the term a “win-win China-EU Comprehensive Strategic Partnership.”⁴

On the EU side too, there has been a similar development of different levels of language about China. In 2003, the relationship was a “maturing partnership.”⁵ By 2006, they had become “partners in a changing relationship.”⁶ By 2016, this had evolved to a relationship of “reciprocal benefit,” which was “based on a positive agenda of partnership coupled with the constructive management of differences.”⁷ By 2019, however, China had become “a strategic competitor for the EU while failing to reciprocate market access and maintain a level playing field.”⁸

Both parties seem to see value in framing their mutual relationship as “strategic.” But there has been increasing divergence over the tone and terms used for this. 2500 years ago, in the era of the Warring States philosophers in China, the “rectification of names” was proposed, ensuring that words accorded with reality. Confucius in the Analects expresses the most famous statement of this: “If names be not correct, language is not in accordance with the truth of things?”⁹ European analytic philosophy some time afterwards paid similarly close attention to the ways in which language not just describes reality, but to a large extent creates it. The EU-China relationship is therefore one in which language plays an important part.

What is striking is the ways in which the two have talked so differently about the same thing – the links between them. In 2021, despite EU demands for “reciprocity,” in one very key area, there has been a lack of this: while the EU sees China now as a “competitor” and states this clearly, China has not reciprocated. The key question, therefore, is in what ways these two important partners are seeing the same thing in different ways, which at least implies the possibility that one day they might align more with each other, and in what ways they are simply looking at totally different things and therefore predetermined to never wholly agree. That gap leaves an opening for the Biden administration to coordinate policy toward China.

The context

The EU and China combined constitute 45 percent of global GDP. One reason for the change in language by the two towards each other since 2001 (and the PRC’s entry to the World Trade Organisation) is that the context has changed under the impact of four factors.

The first is the impact of the 2008 global economic crisis, and the ways in which this shifted even more economic primacy towards the PRC. From 2001 to 2011, China’s GDP quadrupled. Much of this was the result of the ways in which its handling of the 2008 crisis (in particular the huge domestic fiscal stimulus measures it proposed, and the ways in which it diversified away from too much reliance on European and American export markets to others) resulted in double-digit growth rates through 2009 to 2012. This occurred while European economies shrunk. In effect, the two decades since the turn of the millennium have seen China grow richer and Europe poorer, relative to each other. This shift was reflected in the growing assertiveness of China’s claims about the justice of its Sinocentric objectives.

The second is the changes that have occurred in Europe itself. The 2000s were the high tide of integration and “ever closer union.” As a result of the Lisbon Treaty in 2009, a unified European External Action Service (EEAS) was created, with a president, and a much clearer sense of unity and strategic purpose. Already from 2004 to 2007, 14 countries had joined this emerging service, increasing the overall size of the union to 28 before the UK’s departure in 2020 reduced this by one. This radically changed the nature of the EU, making it much larger and more complex. That also had an impact on relations with other countries with which the EU had relations.

The third was the impact of the vote by the United Kingdom to exit the Union in 2016 after a referendum. This marked the end of a torrid period in the EU’s development. Its management of the 2009 Eurozone crisis had been problematic. The terrorist attacks in European countries in 2015, and the influx of refugees from Syria (in particular, the almost 1 million that were resettled in Germany) drove the rise of populism, of which Brexit was the most dramatic, but by no means the only, manifestation. AfD in Germany and Marie Le Pen’s far right candidacy in the French presidential elections in 2017 were also part of this trend. This had a noticeable impact on European confidence; the desire for further enlargement receded. There were more voices within Europe for protecting itself, rather than taking on responsibilities further afield. A Union which regarded itself as a “beacon of values and Enlightenment principles” became much less willing to be vocal about its moral prowess and stature.

Finally, there was the impact of the Trump presidency from 2017 and the ways that this more isolationist and more protectionist attitude exposed Europe to the need to stand either by the US for security, or China for greater economic gains. This manifested itself in a brief moment in mid-2018 when it seemed that Europe might be able to craft a much more distinctive  strategy towards China – something typified by the joint statement issued after the July 2018 EU-China summit held in Beijing, where both sides said they were “strongly committed to fostering an open world economy, improving trade and investment liberalization and facilitation, resisting protectionism and unilateralism, and making globalisation more open, balanced, inclusive, and beneficial to all.”¹⁰ This was possibly because the EU itself had experienced turbulence from the US over steel and other tariffs. In February, the Union had imposed steel tariffs as a result of America imposing the same, with the threat of further escalation.¹¹ For once, China, which had also seen the US impose a series of tariffs over 2018 and into 2019 as part of what was increasingly seen as a `trade war’ seemed to have common cause with the EU against American intransigence. There was speculation that the two might even, for all their differences, work in concert against America in the one area where they might have seen eye to eye. That however dissipated when the president of the Commission, Jean-Claude Juncker, met with Trump in Washington in July that year and managed to work out a deal that resolved the steel and metal issue. In Chinese eyes, Europe once more returned to its natural position – the faithful servant of the US.

This was not a new situation. In 2003, there had been a brief period when the EU was contemplating lifting the arms embargo imposed on the PRC after the Tiananmen Square massacre in 1989. French President Chirac, British Prime Minister Blair, and German Chancellor Schroder seemed aligned. For the Chinese, while lifting this would have had little practical impact (most technology transfer for dual use equipment would have been covered by already existing domestic laws dealing with arms sales) it was symbolically a huge move, and would have been interpreted as a very friendly political gesture. The strong intervention by the George W. Bush administration stopped this process in its tracks. In 2021, the arms embargo is still in place. So are the diplomatic scars it left. Chinese disappointment at the failure of the EU to go with its economic interests and align with China against the US under Trump on trade issues was real, but significantly conditioned by the previous far deeper angst of almost two decades before. This whole process underlined that for the Chinese the EU presented two unpalatable issues – its persistent desire to moralize, and its inability to back up this lofty language with strong, self-determined, and unilateral action. It was a clear case of too much talk, too little action.

EU “tactical retreat”

The contextual issues above – economic woes around 2010 and the Eurozone, and then political woes from 2015 within the EU and in its international relations, meant that it had become a different kind of actor by 2019. This was not a dramatic change–more one of tone and scope of aspirations. Before the Lisbon Treaty, in 2006, the ambitions of the Union towards China were still to encourage transformation in its largest trading partner. There was a residual confidence in the universality and attractiveness of EU values. In the 2006 Communication from the Commission to the EU Council, “EU-China: Closer Partners, Growing Responsibilities,” the statement had been clear:

The EU should continue support for China’s internal political and economic reform process, for a strong and stable China which fully respects fundamental rights and freedoms, protects minorities and guarantees the rule of law. The EU will reinforce co-operation to ensure sustainable development, pursue a fair and robust trade policy and work to strengthen and add balance to bilateral relations. The EU and China should work together in support of peace and stability. The EU should increase co-ordination and joint action and improve co-operation with European industry and civil society.¹²

But in the 2019 statement, the emphasis had shifted from “support for China’s […] reforms” to a more harshly realistic acknowledgement that there were areas where the two had to work, and areas where they would differ – the notion of China being coaxed into a process of transformation was undercut by the very powerful language of the Xi leadership rejecting this kind of relationship, and the fact that China had become much more economically powerful:

China is, simultaneously, in different policy areas, a cooperation partner with whom the EU has closely aligned objectives, a negotiating partner with whom the EU needs to find a balance of interests, an economic competitor in the pursuit of technological leadership, and a systemic rival promoting alternative models of governance. This requires a flexible and pragmatic whole-of-EU approach enabling a principled defence of interests and values.¹³

In effect, this was a tactical readjustment. The EU had to preserve and defend its own values for itself. The business of trying to promote them onto a partner like China was no longer asserted. Perhaps there is an argument that shows that in a playoff between a self-consciously “principled” actor who believes its actions are motivated by higher and more complex ideals, and that of a more prosaic, “pragmatic” partner who simply goes for self-interest and tangible material outcomes at some point there is a strong likelihood that the “principled” side will level down its actions to be more akin to the `self-interested’ one. This equilibrium based on lowest common denominator at least acknowledges that throughout this period of adjustment on the EU’s side, its relations in terms of trade, investment, research, and working together on environmental and technological issues were not unsuccessful. The two sides did achieve things – the 2015 Paris Climate Change convention being notable, where they were closely aligned, despite their differences in the previous Copenhagen Summit six years before.

The reality is that by 2019, China’s trajectory over the decade from the great financial crisis had undermined one of the key assumptions of EU policy – that engagement with China was justified, despite deep political and values differences, because in the end the EU had an opportunity to positively change China. By 2020, on issues from Xinjiang to Hong Kong and freedom of speech within the PRC generally, things had in many ways become even starker: China had been able to economically develop, but had become even more assertive and entrenched in its domestic political behavior and configuration. This meant that the EU had little choice but to assert more clearly that its engagement was, once shorn of high-minded idealism, also, at heart, one founded on self-interest. It remained to be seen in Trump’s days if that self-interest would lead to closer alignment with the US on China policy.

2019 – The era of pragmatic engagement

Engagement driven by ideals may have receded, but the Chinese government’s December 2018 White Paper and the EU 2019 communication referred to above mapped out the space for pragmatic engagement. For China, there were the following four key principles that needed to guide the relationship:

• Uphold mutual respect, equality, and the one China principle to cement the most important political foundation of China-EU relations;
• Uphold openness, inclusiveness, and win-win cooperation, strengthen exchanges in development philosophy and coordination of development plans;
• Uphold fairness and justice, stick together in trying times, and join hands to improve the global governance system;
• Uphold inter-civilization dialogue and harmony in diversity to facilitate mutual learning between the Chinese and European civilizations.¹⁴

Under this, there was a more practical listing of specific areas of cooperation: political, security, and defense fields; trade, investment, connectivity, and fiscal and financial fields; scientific research, innovation, emerging industries, and sustainable development; and social and people-to-people cooperation.

For the EU, there were three “objectives”:

• Based on clearly defined interests and principles, the EU should deepen its engagement with China to promote common interests at the global level.
• The EU should robustly seek more balanced and reciprocal conditions governing the economic relationship.
• Finally, in order to maintain its prosperity, values and, social model over the long term, there are areas where the EU itself needs to adapt to changing economic realities and strengthen its own domestic policies and industrial base.¹⁵

Specifically, these should be achieved through: cooperating with China to support effective multilateralism and fight climate change; committing to international peace, security, and sustainable economic development; achieving a more balanced and reciprocal trade and investment relationship; strengthening the Union’s competitiveness and ensuring a level playing field; and strengthening the security of critical infrastructure and the technological base.

Placing these two sets of specific objectives together, one can discern some clear differences of emphasis. The Chinese White Paper is more generic in its language. Issues are framed purely as “cooperation.” There is no sense of the need to rebalance or address inequalities. The tone of the four aims is positive, very similar to the kinds of promotional language used in Chinese domestic political discourse, where the aim is always to go for better, bigger things – a sort of “socialist discourse” of perpetual improvement and historic teleology applied to the specific example of the EU. Notably, two of the EU’s core aims, regarding competitiveness and security of infrastructure, are focused more on the EU itself and how it should take stronger defensive measures against China and forms of Chinese influence.
Of the core “positive” aims, the most tangible and important are around trade and investment. These can be tabulated:

According to the official EU statistics agency, in the decade from 2010, European trade with the PRC increased from around 350 billion to 560 billion euros. The 100 billion euros in favor of China remained largely unchanged over this period. While European exports to China rose, so did Chinese exports to the EU. The political issue of what was perceived to be a long-term unbalanced trade relationship did not dissipate. European investment into China remained broadly stable. By 2018, the cumulative stock of investment from Europe to China, and from China to Europe, had reached approximately the same level. However, from 2015 onwards, Chinese investment to Europe peaked and then declined, as shown below.

These developments point to a frustrating situation for an entity like the EU which is primarily effective as a trade grouping. It means that the world’s second largest single country economy remains a vast, but unbalanced trading partner, and a less than optimal investment partner. Despite the Chinese economy growing from 2016 to 2018, it had not become a larger investor. This is matched by a similar drop in the Sino-US relationship.
For the EU the stress was on building greater reciprocity and balance. For China, the emphasis was “win-win.” The EU’s stance carries with it the implication that at the moment and leading up to this moment, reciprocity had not been present, and this was the fault of the other party. For China, the language implies again a more positive agenda – that all both sides need to do is to work things out, work harder, and they will achieve aims that suit everyone.

The context for technical cooperation definitely changed over the period 2010 to 2020. The EU mattered historically to the PRC because of the significant amount of technology transfer it offered. From automotive to pharmaceuticals and avionics, companies like Volkswagen, GlaxoSmithKline, and Airbus had undertaken significant joint manufacturing projects in China, some of which involved transfer of knowhow and technology. Europe’s attitude to this kind of cooperation was different than that of the US – it remained more open to Huawei, for instance, and was more open to Chinese investments in critical infrastructure such as ports. In the era in which this sort of transfer could be justified as leading to a China which was more open, the situation was political and diplomatically palatable.

However, by 2016, the emerging language of protectionism in the US, which accompanied Donald Trump’s rise, and Chinese behavior, which showed it had no intention to change its political stance and identity (indeed, they were becoming more egregious), meant that the EU’s habits became harder to sustain. There needed to be justification for being open and giving technology to a partner which did not reciprocate, nor could be classified as a weaker and less developed player to whom some charity was justifiable. The debate around Huawei, and the effective closure of the US to it, was reflected in the EU in increasingly restrictive conditions towards the company. The UK, while still a member of the EU, had been among the most open to the company, but even this changed in 2020 with an undertaking to ensure that Huawei equipment was absent from all critical infrastructure by 2027.

The anomaly of the post-2017 situation vis-à-vis Chinese technology, and something that is reflected in the EU’s somewhat contorted language about this issue, is that while China was stronger and producing more of its own technology, thereby creating a stronger argument than ever to continue working with it to get benefit from this, the political costs of maintaining links in these areas without a strong justifying rationale steadily rose. Finally, an outcome in which the EU had invested – China as a strong research and knowledge partner which had things in areas like Artificial Intelligence and Public Health research it might be able to offer – was curtailed by the fact that actively seizing many of these opportunities had become increasingly risky–a frustrating situation.

The impact of COVID-19

The global pandemic, which originated in China but then spread to the rest of Asia and then Europe and the US over 2020, served to clarify some of the deep structural differences between the EU and the PRC. This was not a revolutionary change; what happened instead was much clearer clarification of the processes that had already been put in place in previous years. Broadly, the areas of difference, and those of alignment, became much more starkly obvious. For the EU, COVID-19 served to underline a number of issues:

Values. Xi Jinping’s government’s management of the crisis underlined the strengths of the autocratic and centralized governance system in China, by dealing with the impact of the pandemic in more effective ways. Italy, Germany, France and most of the rest of the EU experienced major challenges in governance which often left them reeling. The argument that democratic governance was by definition more efficient governance was badly dented. And while the EU as a collective body did eventually co-ordinate a collective response, its initial handling was greatly criticized, impacting once more on its overall confidence.

Public Opinion. Arguments about its origin and the responsibility for its spreading caused a significant deterioration of EU attitudes towards China. This, in turn, hardened the language of European leaders. Chancellor Merkel of Germany was criticized for maintaining a more pragmatic approach. President Macron of France, however, was at times much more vocal, criticizing China’s role in an interview in April.¹⁶ The leadership of the Czech Republic, which had been more positive at least on trade opportunities with the PRC, became radically more negative by the end of 2020. Debates within Europe about China often became heated, with claims that China was undertaking state-directed influence campaigns and infiltrating social media. There were currents of feeling in Europe that came to sound like the fiery language emanating from the US on China.

Human Rights. Contentious issues like Hong Kong and the quelling of protests there and the reports of extensive human rights abuses in Xinjiang exacerbated this. Those seeking to defend continuing engagement with the PRC had to contest with clear signs that in some areas such as human rights and freedom of expression it was in regression. Hong Kong was a particularly high-profile issue because of the historic links with Britain, and because of the arrival in Europe of figures fleeing from the clampdown there like Nathan Lau. The imposition of the National Security Law by Beijing on Hong Kong in July 2020 was condemned by the EU, but in language which was seen as less forceful than that emanating from the now non-EU member the UK. On Xinjiang, the challenges were even starker. The EU continued to make demarches and protests, but resisted commercial pressure until later in the year. Xinjiang in particular highlighted the massive problems of having one of your largest economic partners so utterly different in terms of values and behaviour. It was also an issue over which European impotence was most clearly displayed; there was little evidence that Beijing took any notice of Europe’s denunciations. The only, very tiny consolation for Europe here was that it was also taking no notice of the voices of everyone else.

COVID-19 showed, however, that in some areas, like public health and the environment, there was no option but to continue working together. The pandemic had shown how meaningless country boundaries were in the face of a human-wide problem. Added to this, 2020 continued to give evidence of the deteriorating condition of the world’s natural environment. China remained the necessary partner, even if it was often an unattractive one for the EU. This was underlined by the harsh reality COVID-19 with its associated lockdowns across the EU had resulted in negative growth rates, and greater impoverishment. This was at the same time as China was able to restore growth, reaching over 2.5 per cent by year end. With IMF projections showing that a recession for Europe was very likely, and some level of growth for China also in the cards, the necessity of finding pragmatic ways for the two to work together if only because of practical self-interest, had never been clearer. The EU could assert its values, but COVID-19 had made that cost rise far higher.  With the move to “dual circulation” ideas in China that stressed greater reliance on domestic growth, and more capacity here, the stark reality was that Europe’s importance for China was diminishing at the precise time that China’s importance for the EU was looking to rise.

It is in this context that one has to look at the EU-China Comprehensive Agreement on Investment (CAI), the draft of which was finally agree after seven years of negotiation on December 30, 2020.¹⁷  In view of the range of issues that arose from the COVID-19 crisis, and from the fractiousness in the previous few years, it might seem strange that an agreement was on the cards at all. CAI addressed access to what had been regarded as protected sectors in China. It was therefore justified as being part of the strategic aims of the EU as they had been spelt out in the 2019 document quoted above, and in important communications prior to this. In particular, it was designed to allow greater reciprocity and deliver benefits for EU companies – the “level playing field” mentioned in the 2019 document.

As stated by the EU officially, the CAI did offer some means to getting better access to healthcare, financial services, computer services, environmental services, and other priority areas for EU companies. It also stipulated regulations policing forced technology transfers (something that had been targeted by the US-China agreement from January the same year), and demanded transparency in the subsidies enjoyed by Chinese companies coming to work in Europe. The most important part of the CAI from the point of view of values was the language on labor standards and corporate social responsibility:

China commits, in the areas of labour and environment, not to lower the standards of protection in order to attract investment, not to use labour and environment standards for protectionist purposes, as well as to respect its international obligations in the relevant treaties. China will support the uptake of corporate social responsibility by its companies.¹⁸

CAI was an important political event for the PRC, isolated because of the global response to COVID-19 and in need of some kind of diplomatic success. It was for this reason that it immediately aroused criticism, not only in Europe but also in the US, where political attitudes towards China had hardened and become far more negative. The mechanism by which the agreement was meant to be policed is, of course, untested. And the commitment to labor standards for some critics was nothing more than empty rhetoric. There was little detail about what the actual commitments meant in practice, and how they would be imposed.

In that sense, CAI is symptomatic of the shift from an aspirational, ambitious EU posture towards China, informed by confidence in the transformative power of its own values, to a much more pragmatic, less idealistic stance where the critical mission was to ensure at least some tangible outcomes, even if these carried risks. The EU in the end can justify itself on the grounds of self-interest. It is hard to do so in terms of using its investment power and economic leverage to change China, now largely abandoned. The great unanswered question is the ways in which the economic impact of COVID-19 will force further compromises in the way the EU views China, and restricts its strategic options even further.

EU-US cooperation on China

A big test is EU-US cooperation over dealing with China. The two do not have a strong track record on aligning their approach so far. There has never been talk of a G3. The world’s three largest economic blocs, which account for almost half of global GDP, have never, until 2020, formally sat in a room with each other. What cooperation on EU-US China relations had happened till 2020 largely did so through a more generic Security and Development Dialogue. In October 2020, to fierce Chinese criticism, a EU-US China Dialogue was set up. The rationale for this was explained in a Communication from the European Commission to the Parliament, European Council, and EU members in December 2020.

Entitled “A New EU-US Agenda for Global Change” on China, the document stated:

For the EU, China is a negotiating partner for cooperation, an economic competitor, and a systemic rival. The approach set out in the EU-China Strategic Outlook provides a solid roadmap to defend our common interests and values. As open democratic societies and market economies, the EU and the US agree on the strategic challenge presented by China’s growing international assertiveness, even if we do not always agree on the best way to address this. The new EU-US Dialogue on China will provide a key mechanism for advancing our interests and managing our differences.¹⁹

This testifies that the combination of the harder edged line on China during the Trump presidency, and the pandemic, had caused the EU’s own approach to Beijing to further toughen, at least rhetorically. But Trump’s time in power had also raised major questions about the idea of “common interests and values” placed in this statement. There were plenty in the EU, from Angela Merkel in Germany downwards, who had questioned, in different ways, whether the US and EU really were that aligned with each other, let alone over the PRC. Merkel herself had said earlier in Trump’s presidency that the EU needed to look far more after its own interests in the emerging new world. That implied divergence, not the opposite.

Biden’s presidency may mean that the EU and US in this dialogue can at least work at the fundamental question of what kind of threat or risk China offers. “Systematic rivalry” in the EU’s discourse does not immediately mean that it figures as the almost existential threat asserted in the more frenetic US debate on the PRC. The EU, after all, is not nervously looking at its place as the global number one economy being usurped by the current number two, as the US is. The EU either needs to persuade the US that China is a rival in terms of technology, economic competitiveness, and investment behavior, or the US needs to convince the EU that China presents a far more fundamental threat in terms of desire for global dominance and advancement of its own political values and ways of doing things outside its borders. Until this issue is out of the way, the danger is present that because they have different conceptions of the problem, they will adopt competing methods to deal with it.

It is clear however that COVID-19 with its urgency has created far more space for the EU and US to work out the areas of permissible cooperation and interest, and a stronger means of evaluating the risks that China presents – and the opportunities. If the EU-China investment agreement discussed above is passed by the European Parliament, then the most powerful thing the EU can do is to prove that it is possible to have reciprocal relations that work to one’s benefit with China, and that answer some of the extremely serious challenges the global economy faces at the moment. Seeing if this is so, however, will take time – time that the US might not grant. Put starkly, never has the EU had the opportunity to play a stronger role in brokering relations between China and the US and identifying the value of having a pragmatic path – and never before have the risks of this failing because of lack of conviction within the EU itself been greater. The Union’s track record in this area is not good; but perhaps this time, necessity will make things different.